Damas International yesterday received a US$455 million cash bid from a pair of investors, creating the prospect of ending the jeweller's turbulent listing on Nasdaq Dubai.
$445m bid for Damas by Mannai and EFG-Hermes
Damas International yesterday received a US$445 million (Dh1.6 billion) cash bid from a pair of investors, creating the prospect of ending the jeweller's turbulent listing on Nasdaq Dubai.
Mannai Corporation, a Qatari conglomerate selling cars, home appliances and other goods, and EFG-Hermes, an Egyptian investment bank, have jointly offered 45 US cents per share to Damas shareholders.
The deal represents a 45 per cent premium to the jeweller's closing price on the day before Mannai first announced its interest in the company on January 10. If the deal is accepted by shareholders, Mannai and EFG hope to hold shares in Damas of 66 per cent and 19 per cent, respectively.
The consortium has already secured support from more than three quarters of shareholders and the bid is expected to become binding within two weeks. A confirmed deal would delist Damas from the Dubai exchange.
"Damas is a very attractive retail brand with a highly successful regional business. Our bid to acquire Damas is testament to its sound business model and promising growth potential," said Alekh Grewal, the chief executive of Mannai.
The Damas board, which is being advised by Nomura, is recommending the deal to shareholders.
"Mannai and EFG-Hermes are ideal partners for Damas to enable the company to begin the next chapter of its business growth," said Anan Fakhreddin, the chief executive of Damas. "We are very pleased to recommend this bid to our shareholders and we encourage them to accept it."
In a twist in the offer, the bidders have also proposed that the Abdullah brothers - the majority owners under whom Damas faced financial turmoil - be required to reinvest part of the money from their shares to form a collective interest of 15 per cent.
The move is part of a previous agreement by the brothers - Tawhid, Tawfiq and Tamjid - and their creditors, the bid consortium said.
A deal with Mannai and EFG-Hermes would put an end to a hard few years in which Damas came near to financial ruin.
The Abdullah brothers were the subject of the strictest disciplinary action in the history of the Dubai International Financial Centre in March 2010 for improperly withdrawing Dh365m of cash and almost two tonnes of gold valued at Dh250m from Damas without shareholder approval.
The brothers owned Damas before it became a public company in 2008 and still owe it more than Dh600m. They owe a further Dh1.2bn to banks, bringing their total obligations to Dh1.8bn. They are still 51 per cent shareholders in the company.
The jeweller signed an agreement last year with banks and the brothers, who were given three years to repay in the hope that their assets would appreciate in value.
Much of the brothers' wealth is tied up in property and investments that creditors hope will eventually increase in value.
In May, Damas repaid Dh200m of loans to banks and completed a Dh3bn debt restructuring in which it is to repay Dh1.1bn of loans over three years and receive working capital of Dh1.9bn.
"Mannai's excellent operational track record combined with our deep investments expertise will provide a unique platform to further strengthen Damas' market position and expand its product offering," said Karim Moussa, the managing director of EFG-Hermes.
The move to delist Damas would be the latest blow for the Nasdaq Dubai stock exchange, which launched with high hopes in 2005 but which has struggled to attract companies to list.
Besides Damas, the interior design company Depa is rumoured to be actively considering a delisting from the bourse.
DP World, the other major company to have listed on the exchange, was admitted to trading on the London Stock Exchange.
* with additional reporting by Gregor Stuart Hunter